Chinese Brands Have Begun Their Assault On The American Market

Mark 2014 as the year the tide started to turn. The brand value tide. This year, we see a lot of talk devoted to the just-released fact from the Interbrand’s Best Global Brands report that both Apple and Google’s brands exceed 100 billion dollars in value, marking the first time any company, let alone two, has cracked that barrier. However, the role of technology in our economy has not been news for a long time. Even so, the fact that another tech company, China’s Huawei Technologies Co., Ltd., has cracked the top 100 in brand value, is momentous. China may be on the upswing for imports (up 7% last quarter according to the most recent survey). But exports grew at over twice that rate (15%).

China’s manufacturing dominance has been from its manufacturing for others. Developing its own brands has not been China’s strength. Chinese companies have not been developing strong and dominant brands in the U.S. market.

I spent part of the past week at a Commerce Department program in New York. I was there, in part, to moderate the panel’s discussion about IP rights and China. The program was called Discovering Global Markets – China. The focus is on helping U.S. exporters. But the program was full of experts from government and private industry. One man who has worked in China for many years named Michael Zakkour of Tompkins International calls this the “golden age for American brands” in China. He has just written a book called “China’s Super Consumers: What 1 Billion Customers Want And How To Sell It To Them.” (Zakkour is also a Forbes contributor.) The exploding Chinese middle class, we are told, has an insatiable appetite for products, especially American products. Why? Because the consumers do not trust many domestic goods, especially in areas like health care and nutritional supplements. They trust American names. Bingo! Trust is the absolute core of brand name value. The Commerce Department wants American companies to take advantage of China’s consumer market, which, in size, rivals the USA and EU combined.

We know about Alibaba. The name Haier has gained some traction in appliances. We know Lenovo now makes the ThinkPad.

But considering that China has become the world’s largest economy and greatest exporter our planet has ever seen, how many of China’s top brands are household names here? A report by Millward Brown says that Chinese brand awareness is 2% in the USA (10% in the UK). If I tell you the top 10 brands from China, how many will you recognize? Let’s find out: in order of estimated value, the top 10 Chinese brands are: China Mobile, ICBC, Tencent, China Construction Bank, Baidu, Agricultural Bank of China, Bank of China, PetroChina, Sinopec, China Life.

Some of these marks are destined to be household names in our country. Look at what has happened already: A car brand from Korea? No one would have given it a chance in the early 1980s. Now Kia and Hyundai are known for their quality, and sellers of luxury vehicles they position against the Germans. When I was a kid, “made in Japan” meant poor quality; the phrase was usually the punchline of a joke. Japanese cars started to storm the U.S. because of their superior fuel economy, following the first great Arab oil embargo in 1973. But even ten years later, I was having dinner at my grandmother’s house. We were watching the nightly news on TV and a story came on about Japanese cars. My grandmother turned to me and said “have you ever seen a Japanese car?” She didn’t believe America could be buying automobiles from Japan. (Disclosure: she didn’t drive.) By the next decade, American companies were all trying to emulate Japanese entities, and the Japanese carved out large segments of the U.S. market in cars, televisions, appliances, machinery, heavy equipment and chemicals, with brands like Toyota, Honda, Panasonic, Sony, Hitachi, Mitsubishi, and Toshiba.

A PetroChina station in Xinjiang, China. Their name is written in English, Chinese, and Uyghur. Taken June 2007. (Photo credit: Wikipedia)

Huawei is the first to crack the global list, wedged between Corona and Heineken. Go to Huawei’s corporate campus outside of Shenzhen, China and you might think you are in Silicon Valley. China may be going buggy for American brands, but the era of the Chinese brand is upon us, and the list will never be the same.